Gary Vaynerchuck Wants you to Invest in Memorabilia — Here’s What you Need to Know About Rare Cards and Grading
Everything from rampant fraud, strategies, rarity, and the arbitrary; from Pokémon to sports cards.
There is some really expensive cardboard out there. For almost everybody out there, save a few, it would be mind-numbing to think that they could be worth several millions of dollars.
For the uninitiated, it sounds maddening. To the initiated, it’s fairly arbitrary. To those who truly understand this world, people like Gary Vaynerchuck function like a hurricane crashing against an otherwise beautiful shoreline.
Gary Vaynerchuck’s voice is something of a train wreck. It’s loud, filled with spittle, but something you want to listen to even though you know you’re probably receiving a gross simplification of a complicated and niche topic.
However, every once in a while, his words may be touching a subject that’s highly interesting. Even when both his commentary and opinion are ungrounded, that is.
We’ll go over what he said, what is true, what is absolutely false, and what you need to know before you take the plunge into this world of outrageously priced, scientifically-graded cardboard.
Sports cards, and card collection, have been an American past time since tobacco companies began putting them into cigarette packs as a way to boost sales in the early 1900s. Baseball cards have been around since the 1860s.
Since then, a variety of companies have formed to produce these cards, gaining partnerships with the owners for autographs, pieces of jerseys, and everything in between.
To add to that, there has been a slew of lawsuits between the card companies and the players and sports leagues. To make things even crazier, these cards are often graded scientifically to tell the world without a shadow of a doubt whether the card is authentic and whether it’s actually in decent condition.
A lot of this leaves room for the new generation’s guru to entice them into the new Ponzi scheme. There is an inevitable truth in the underbelly of the craziness that almost all sports cards and memorabilia are otherwise worthless. And that single underpinning raises the issue of why a card maker would ever create a card to put into a pack to put into a box that will appreciate to insane heights in the future.
Madness in modernity
One of the most famous cards in antiquity is the Johannes Peter “Honus” Wagner T-206.
This card was produced, designed, and issued by the American Tobacco Company between 1909 to 1911. While Wagner was a phenomenal baseball player, he was certainly not the greatest of all time. You can argue that he wasn’t even the greatest of his time. If you exclude the Frankenstein cards in Mike Trout and Giannis Antetokounmpo of today, Honus’s T206 is probably going to go down as an accidental piece of timeless artwork. The reasoning behind this is pure circumstance. Wagner had the ATC pull his card out of circulation, leaving many critics to believe that there are somewhere between 50 to 200 of these cards ever produced. Furthermore, it leaves experts to believe that most of these cards are either in poor condition, destroyed, or simply lost. The last one that sold on October 1st, 2016 went for $3,323,760. It was graded by PSA as a 5 (the grade is out of 10, 10 being the absolute best condition possible). If this was any other card, it would be absolutely worthless at that grade. Since this card doesn’t exist in circulation,— except for in folklore and auction — it has shot up in value over the last few decades.
But that’s not the only thing that’s gone up in value over the years. Sportscard manufacturing and printing have been greatly monetized in the last three decades, with companies like Fleer, Topps, Bowman, Donruss, Upper Deck, and Panini taking charge at random points in history to saturate the market with their products. The clearest winners of the years haven’t been the collectors — but, rather, the people taking control of the printing process.
Nobody will tell you how many cards they produced, but we can always follow the money
It’s a tight secret just how many cards are produced in this industry. On the Rich Eisen Show, Gay Vaynerchuck went on to say that the cards produced in the 1990s are “garbage” and that you would have been “smart” to buy 1986–1987 Fleer basketball, referencing the infamous Michael Jordan rookie card.
His analysis is completely ungrounded, and it is shared by many on the internet who seem to follow that hivemind. It’s very clear that no card company would want the consumer to know how many cards are being produced, ever.
Companies such as Collectors Universe, however, clue us in on those details. Most collectors will eventually grade cards they believe are going to be valuable in the future. Collectors Universe owns a company called PSA, or Professional Sports Authenticator. The PSA’s job is to grade and authenticate cards and coins. On their latest 2020 annual report, Collectors Universe claims that “in particular, our coin and cards and autographs authentication and grading businesses… account for over 90% of our revenues…”.
If you judge solely from their claims that grading accounts for “90% of their revenues”, then one could easily follow how much more lucrative the card grading business has become for companies such as Collectors Universe. By associativity, you could stretch this to suggest how much more cards are being manufactured today, too.
In 1998, they saw a net revenue for the entire year of $10.989 million. By 2020, that number became $78.891 million. A counterpoint might argue that an increase in revenue for card grading doesn’t necessarily indicate that there are more cards being produced in any given year. However, the general trend in the card collecting world would tell you that it is.
For instance, with Michael Jordan’s 1986 Fleer rookie card or Kobe Bryant’s 1996 Topps Chrome rookie card or Lebron James’s 2003 Topps Chrome rookie card, the holy grail of cards had to be graded within the first few years they were pulled. The reasoning for this was simple: If you wanted to future-proof your card and have it be valuable to any collector, it absolutely needed to be graded. Grading it early meant you were protecting it from any damage you might cause in the future.
At a minimum, it needed to be known that the card in hand was authentic, which these companies regularly offer as a service.
Is Gary correct about cards in the 1990s being garbage?
Most cards in any era of card collecting are trash. That’s the game; you wouldn’t know what the hell the most valuable card of a time period is going to be. History and the niche collecting world determine what the value of a certain piece of cardboard is. It’s never going to be Gary Vaynerchuck, and, unfortunately, it never will.
“There is going to be a $50,000 Zion [Williamson] card right now pulled out of a $6 pack” — Gary Vaynerchuck, Rich Eisen Show.
This actually happens with any up-and-coming superstar. However, we never know any of the following:
- From which box is it going to be pulled?
- What kind of card is it?
- Is it a rookie or a one-off?
- Which rookie card is it going to be? There are many rookies and many boxes and many packs where that card would be worthless (See Lebron, Kobe, Jordan or any superstar’s rookie cards, for example).
And all of these things are contingent on the fact that Zion actually follows through and becomes a legend. If he doesn’t, none of this will matter because his legacy will be worthless. If he gets injured and his career is cut prematurely, same thing. That happens to superstars all the time.
“I think that Kobe rookies or Lebron rookies that are graded well are trading at about $1,000 or $5,000 apiece a few years from now” — Gary Vaynerchuck, Rich Eisen Show.
This is another statement made by someone who has no idea what the card collecting world is. In fact, some of the most valuable sports cards are exactly Kobe Bryant rookie cards. His 1996–97 Topps Chrome rookie card, as a refractor, (which is a special name used to tell people it’s holographic) will sell for anywhere from $40,000 to $200,000 on eBay right now.
And the above is only a grade 9. According to Beckett Grading Service, — another grading company — there are less than 300 graded refractors out there. According to PSA, there are about 400.
Just like Honus Wagner, it was never related solely to the player. The player, and the legacy, is extremely important. But those things are independent of the following, which are also incredibly important to the card collecting world:
- Arbitrary underproduction
There is a Michael Jordan card from this same set that could go for as much as $20,000. In fact, even Vaynerchuck’s claim about Lebron rookie cards are wrong. His rookie card from the 2003–2004 Topps Chrome series go for as much as $200,000 if it’s perfectly graded. This is not to mention the fact that there are even crazier variants of refractors in the newer set that have never seen a perfect grade, meaning we don’t know just how high some of these would sell for.
The same set of standards apply here, too. If you look at Beckett’s end, there are almost no “10" graded cards available. In fact, the zero that follows on the very right end before the “246” and the “54” is Beckett’s “Black 10” grade, meaning the card was absolutely flawless in every possible way. That card does not exist at all.
With both Kobe and Lebron, you have a handful of rookie cards that are probably $200 to $1,000 in value. However, you would have likely spent that amount of money on boxes or packs to have picked them out yourself. If you are trying to do what Gary is telling you to do above, you’re going to be a miserable human being listening to someone who has no background in this tight little unknown industry.
Picking the Fleer 1986 box doesn’t make you smart. It makes you lucky. For the same reason that if you picked out Kobe from the 1996–97 Topps Chrome box, you wouldn’t have known you would be sitting on a quarter-million dollars today.
But even that value might be fraudulent and made up
Here is an interesting example of the pricing history on a 1955 Topps Roberto Clemente card:
- January 2015 — $29,127
- October 2015 — $35,864
- May 2016 — $131,450
- July 2016 — $150,391
- November 2016 — $38,500
- November 2018 — $26,400
- October 2020 — $50,000
It doesn’t take a genius to understand what is happening. There are so few of these things in the entire world that nobody knows if one person or a few people may own all of a certain card. For example, if Kobe’s Topps Chrome rookie card in grade 9 or 10 is owned by a few friends, they can all refuse to sell and choose to dump at a point they find opportunistic for themselves. When that happens, the market craters. In the past, it has done exactly that. The market is highly illiquid, especially at the very high end where so few of these exist. There have been periods where a certain card hasn’t been seen for years.
Nobody documents these numbers. Nobody knows about the industry except for the few hobbyists within the industry. People aren’t keeping track of who owns what, except for the fact that the PSA and BGS literally tell you how many of a certain card there is. Outside of that, there is no regulation on who is doing what.
Card rigging is just one example. Companies such as the PSA and PWCC (the largest sports card seller on eBay) have been accused of anything from demand rigging to shill-bidding — this is when you get your other friends or ghost accounts to bid the price up, thus inflating the value — to card cutting and trimming.
It’s become such an issue that the FBI has gotten involved. This has been as recent as last year, where subpoenas have been issued to auction houses, authentication firms, and dealers who submitted “possibly altered cards for auctions”.
Companies like PWCC claim that they have refunded money to “hundreds” of people already, avoiding the fact that the cards were graded as authentic when they were, in fact, either altered significantly or counterfeit. Today, PWCC still continues to auction cards and sports memorabilia on eBay, with almost 250,000 feedback accrued. If you go through their listings, you’ll find that almost every single card is graded by the PSA, whereas only a small, insignificant amount is graded by BGS.
When you take a peek at some of their feedback, you’ll see the same issues occurring within the last 6 months:
To ignore the market fixing and the market makers within the industry is to enter it completely blind. You’re creating risk willfully where there has been danger before and there continues to be danger currently. Furthermore, it brings into question whether you can trust the PSA to even grade your card, given that they have a history of allowing trimmed cards or even forged cards to receive an authentic stamp and a grade.
The bottom line is that you can’t actually know the value of your card, and you won’t know if a $50,000 Zion card is going to come from a $6 pack today. You especially won’t know if it is something sent to the PSA or purchased from PWCC. Your best odds at this alternative investment is to obtain the card that you truly enjoy as early as possible and have it sent to Beckett’s Grading Service. They are a tougher grading company, they’re not embroiled in any investigations, and they’re honest about your card’s condition. If you end up going through PSA or PWCC and they send you something altered, fake, or inflated, then you’ll have nobody claiming any ownership or responsibility for the fraud. Because that’s the entire point of a highly loose, unregulated, and largely unknown industry; it’s ripe for exploitation and abuse.
How many of the same kind are they making?
Yes, everybody is going to want a $100,000 Giannis or Zion card in 3–4 years. The reality is that card makers understand that the popularity of card collecting has steadily increased, not decreased. Collectors Universe has only seen revenue go up every single year since 1998. It’s highly likely if we had additional years of financial documents, we would see that revenue only go up through the years that Vaynerchuck confidently says were the “garbage” time period for sportscard collecting.
It’s probably the case that they’ve been supplied at the same rate or greater, and they’ve only kept that supply up over the years.
Cards haven’t stayed the same, either. If we go back to the Topps Chrome example for Kobe’s rookie year, we can clearly understand this differentiation. For the 1996–97 year, Topps Chrome specifically had the Kobe Bryant regular card and its refractor (or holographic) version.
By the time the 2003–2004 Topps Chrome set arrived, the set didn’t look the same anymore. For example, Lebron James had a regular card, a refractor, a black refractor, a gold refractor, and an xfractor within the set. Topps Chrome had gotten smarter about how to market rarity.
The popularity of numbering cards has given the semblance of rarity, but the data that the grading companies provide tell another story.
Focusing on the regular, non-refractor versions of each, we see over double for Lebron. If we include refractors, we see several-fold more for Lebron than Kobe. Kobe’s refractors amount to less than the total amount of black refractors ever produced, drawing in only more scrutiny as to what Lebron’s cards would be valued in a non-manipulated market.
When Vaynerchuck yells about the $50,000 Zion or Giannis card 2–3 years from now, he’s either speaking about some card like Kobe’s that was underproduced or one of these new “serially” numbered cards that are designed to seem rare when, in actuality, they’re intentionally stamped to yield pseudo-value.
However, the era of the Honus Wagner or the Kobe Bryant cards is gone. Today’s era is the Frankenstein one-offs that are designed with the exact intention to look different. These cards aren’t different, though. They’re not even rare because there is nothing else to really compare it to. Their boxes are generally absurdly expensive to open, so they’re not $6 as Vaynerchuck would suggest. They’re also cards that look very similar to something else within that set — except for the fact that they’ll have a machine emboss a serial number on it to make the world believe it’s the only one of its kind.
The Wagners and the Jordans and the Kobes and the Lebrons are extremely valuable today because there are so few of them within a box that had so many other things. Those boxes generally didn’t sell that popularly, those cards weren’t pulled that frequently, and the high grades don’t exist. Those accidental ingredients led to outrageous valuations. And those valuations look like pennies in comparison to a Mike Trout card that’s $4 million or a Giannis card that is just shy of $2 million.
Card manufacturing and processing advancements and the relationship with card rarity
Otherwise known as the “awareness” factor from the card-making companies. When a company like BGS grades a card, they grade them based on the corners, edges, surface, and the centering. Edges and corners are generally in great to perfect condition at any point in time as long as the card was kept safe. However, when it comes to items such as the centering or the surface, the person who pulls the card has no control over the printing process, the print lines on the card left by the machines that made the card, or the centering alignment.
However, all of these things have gotten significantly better over time, and that’s for obvious reasons. Cards before the 2000s could easily fall prey to any of the following:
- Print lines, weird scratches on the surface.
- Off-center for many of the production of cards.
- Errors on the cards, errors in the manufacturing.
- Any number of things that is a consequence of older machines and wear and tear.
Strangely enough, these have made some of the cards of the past more expensive because the perfect card does not exist. Ironically, even though the cards of the modern era are far better printed and far better centered, the plethora of those amazing cards has left them in an industry that won’t have an appetite for them. This is because there are so many more “9”, “10”, and “Black 10” grades for these cards — whereas with the Fleer 1986 Jordan rookie of the Topps Chrome 1996 Kobe refractor, it will be next to impossible to find a “Black 10” or a “10”. For Kobe, only 13 BGS “10” grades exist, and only 2 BGS “Black 10” grades exist.
In Michael Jordan’s case, of the 11,426 sent to BGS to be graded, there are only six in the entire world that were graded a “10” and absolutely none that have a “Black 10”.
“Buy shit towards the end of a franchise being cool… where the equity of the franchise is still very great…”
Gary Vaynerchuck said this in a video on his Twitter.
Anticipating the value in something is the greatest antithesis in killing the value.
What do I mean?
If everybody will expect the value of something to go up, thereby purchasing it in crazy quantities to hold them and keep them boxed in perfect condition, then the market will actualize that change. If everybody anticipates the same thing, makes the same move, then the demand in that market for that item has shifted into everybody hoarding it instead.
Pump and dump scams work in much the same way, actually. This one is better hidden, but the mode of operation and the philosophy that it is wrapped in is the same.
In fact, if we go over almost any piece of memorabilia, you’ll find that the most valuable stuff has nothing to do with when you’re buying the memorabilia.
There is a Boba Fett action figure released in 1979 that is nearly a quarter-million dollars today. Some auction sites have had them for as much as a half-million dollars.
Because the toy company originally intended Boba Fett to include a rocket-firing backpack. After mailing around 20 or so prototypes of this toy, the rocket backpack was abandoned for a mass-market toy that is worth nowhere near as much.
One of the most expensive Hot Wheels collectibles is a 1969 Volkswagen Minibus. It’s pink, and it’s also a prototype. It goes for around $250,000.
Even if we look in the card collecting world, we wouldn’t see the value in purchasing at the end of a franchise being cool. If you bought Pokemon cards at the end of the franchise, you’d be sitting on an actual paperweight. The most expensive Pokemon cards were the first ones, otherwise known as the first edition sets. They had a very limited run of these cards, nobody thought they were going to be valuable, and it is thought that so few of them exist.
There are almost no first edition base set Charizard cards out there with a “10” grade. In fact, Beckett tells us there are three, and someone on YouTube has two of them. No “Black 10” Charizard holographic cards exist, at least none 21 years after the fact. The BGS “10” Charizard holographic has been appraised to be worth upwards of a million dollars. A PSA “10” is on eBay currently selling for $389,995 — as of October 18th, 2020.
Even if we look into the sports card world, we will find that buying memorabilia at the end of the franchise makes absolutely no sense. Topps Chrome’s 1996–97 Kobe Bryant refractor was extremely valuable because it was
- the launch of their “Topps Chrome” sets. They still sold “Topps” boxes, as they had before the 1996–97 year.
- Kobe Bryant’s rookie year, which also made it valuable.
- the introduction of the “refractor” — this is an actual registered trademark of The Topps Company, Inc. They coined a word to mean “holographic” without saying holographic.
- short printed (and realized after the fact that it was short printed).
Yes, Kobe was a phenomenal player. But he has a lot of rookie cards that don’t stack up against the Topps Chrome card. His “Topps” version of the same card won’t sell for even 1/50th the price of the Topps Chrome refractor.
The same philosophy can be applied to the 1986–87 Fleer Michael Jordan rookie. Before 1986, there were no “Fleer Basketball” cards. It was their first set of basketball cards, and it included the Michael Jordan rookie that became infamous today.
Lebron’s Topps Chrome rookie card has significant value, too. Topps Chrome began to differentiate all the different holographic sets, creating black, gold, and x-fractors. Whether this stands the test of time and continues to hold astronomical value, we won’t really know. Whether this is now starting to become a Ponzi-scheme, we won’t really know. We do know that they are currently selling for insane prices regardless of Topps continuing to make more different versions of the same exact thing.
Even Michael Jordan’s refractor card from the 1996–97 Topps Chrome set will fetch anywhere from $20,000-$40,000 if it is graded perfectly.
There was a Michael Jordan card from 1997 that sold on eBay for $350,000 in 2019.
As you can see in the photo, PSA claims the card was altered and the card was sold by PWCC, who has been mixed in with fraud and has some highly questionable feedback. Whether this is the true value of this card or just another example of shill-bidding, it’s hard to tell.
In any case, every single example is a testament to the fact that buying at the end of a franchise makes absolutely zero sense. Cards and memorabilia are generally valuable where they were short-printed, misprinted, or changed in some way. The less that there were available, the better the investment. Figuring out when this is going to happen is a game for a psychic. Nobody would tell you that Fleer is magically starting to get into basketball cards in 1986. Nobody was talking about Topps creating a secondary, higher cut of “Topps Chrome” cards in 1996.
These things happen in a small, niche market that nobody is paying attention to. It’s not until a decade or two later that they accumulate in value and gain attention. It certainly doesn’t happen in two to three years.
Final thoughts: What should you be looking for instead?
For starters, you should be realistic. Card collecting is something you do for fun and not as an alternative investment. If you truly want to look at this thing as an alternative investment, you should go with the classic, time-tested stuff.
There are really old cards that are more artwork than they are anything else. Baseball cards from the early 1900s are a beautiful example of that. If you’re looking more forward, I would avoid anything modern concerning a player who is young and still playing. Superstars that are extremely young and have a lot of promise are also the most volatile in the market for obvious reasons. You never know what that career trajectory is going to look like.
This is a good list of things to run by:
- Make sure what you are buying is vetted by the actual card collecting world. Look at forums with other collectors, look at the BGS and PSA population reports.
- If the card is graded, you should trend toward BGS for the grading (whether you are buying it graded or you are sending it to a grading agency).
- Try to stay away from PWCC. People have claimed that the PSA cases are “tamper-proof” but there is evidence that suggests it could easily be broken open, swapped for a counterfeit card and resealed. The number on the PSA case would remain authentic — but your card would be fake. If you are paranoid about something like this, you can always break the case open yourself and send the card to BGS to be graded independently. You can also send the card in its case to BGS for them to verify its authenticity. It never hurts to get a second opinion, especially when there is so much controversy surrounding that seller and the PSA.
- Stay away from any type of “hype”. Most cards that become valuable are silent for a long time. The 1986 Jordan, 1996 Kobe, 2003 Lebron cards were slow to find value in the market. It wasn’t until the last decade that their numbers shot sky-high. It’s also a toss-up whether those prices will actually stay this high. Much of the hype on social media is tossed around by people who don’t understand the industry nor the valuations. Sports cards do fall in value significantly and they have in the past. They’re not immune and you shouldn’t fall prey to false assumptions from people whose advice can easily be picked apart:
“The culture of sneaker-flipping is going to bleed into sports cards because these kids can’t get enough inventory with sneakers”
- This is a piece of advice if you’re a psychic. Look for what will be short-printed. Look for anything where the card was altered by the entity making the cards. Stay away from the Frankenstein one-off cards. Again, this is kind of a task that’s impossible in nature, and it’s easy to understand why.
Hindsight is always 20/20. It’s no different than the marketing gurus telling you that they can pick the next greatest stock that is going to explode and yield 20,000% to investors. Or the next great cryptocurrency that is going to change the way we pay for things.
Anybody can look at a stock chart with 20 years of historical data and cherry-pick out of the noise. The problem isn’t in using the chart’s information, it’s that you can’t predict what that chart will look like going forward.
The card collecting world is no different.